In the last post, we explored how booming cryptocurrencies such as Bitcoin require energy-intensive mechanisms like mining to operate. Though countries like El Salvador has accepted the cryptocurrency as legal tender, there are other countries and organisations that have been implementing regulations against these energy-intensive currencies to protest against the environmental pollution brought about by their usage.

For example, Tesla CEO Elon Musk had removed Bitcoin as a permitted currency to purchase Tesla’s vehicles, citing his concerns over the increased use of fossil fuels for bitcoin mining and transactions over a Twitter post (Abbruzzese, 2021). On a larger scale, China has implemented a nationwide ban on all cryptocurrencies, with one of the factors to be the high energy use needed to operate (University of Southern California, 2021).

While the regulation has been enacted to reduce carbon emissions, the problem of environmental pollution has unfortunately been worsened after the ban. This is due to the fact that Bitcoin miners were heavily dependent on China’s hydropower as their energy source (Sarlin, 2022). When the ban was enacted, these Bitcoin miners had to shift and find energy elsewhere, which resulted in their shift to dirtier energy sources such as natural gas in the United States (Sarlin, 2022). As hydropower is a much cleaner source of energy, the increase usage of natural gas to sustain cryptocurrency mining operations would result in an increase in the global carbon emissions. Therefore, this illustrates the difficulty in regulating cryptocurrency and the implications of its environmental pollution. Definitely, with the high demand of cryptocurrency usage, banning the process of mining would only serve to shift these miners to other dirtier forms of energy to capitalise on the existing market.

In my opinion, I believe that the environmental implications of cryptocurrencies is something that is extremely complicated to regulate. For one, the appeal of cryptocurrencies stem from its characteristics of legitimacy and anonymity in transactions. However, in order to fulfil these characteristics, energy intensive mining is required. Furthermore, as the cryptocurrency market continuously expands, with the bitcoin market alone thriving at a value of US$1.5 trillion (O’Malley and Zappone, 2021), the demand of cryptocurrency is certainly hard to ignore.

How then do we combat such an impenetrable source of environmental pollution?

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